Municipalities often raise capital to fund public projects by issuing bonds and having
those bonds insured in the financial guaranty insurance (FGI) market to lower the
cost of raising the capital.

Following the development of FGI, the municipal debt markets thrived for many decades
until the recent financial crisis when the sub-prime mortgage market experienced heavy
losses that, due to the highly systemic and interconnected nature of the modern financial
system, spread to the balance sheets of the guarantors who suffered severe losses. In
the wake of these events, many guarantors suspended the writing of new business or went
through corporate restructuring. Currently, only Assured Guaranty actively writes business.
As a result, states and other localities have suffered financially as the cost of raising capital
has risen during a time of fiscal difficultly.

The purpose of this hearing is to explore the circumstances leading to the crippling of the
FGI market and to evaluate policy solutions to these issues including, but not limited to,
A.11342-A (Morelle) which would permit financial guaranty insurers
to use the net value of a qualified trust as an asset with respect to reserving requirements.
This bill may therefore permit the use of new business models with lower costs of capital that
could facilitate the revival of the FGI market and decrease the cost of raising public capital.

Persons wishing to present pertinent testimony to the Committee at the above hearing should
complete and return the enclosed reply form by December 17th. It is important that the
reply form be fully completed and returned so that persons may be notified in the event of
emergency postponement or cancellation.

Oral testimony shall be limited to 15 minutes' duration and shall be by invitation only.
In preparing the order of witnesses, the Committee will attempt to accommodate individual
requests to speak at particular times in view of special circumstances. These requests should
be made on the attached reply form or communicated to Committee staff as early as possible.

Ten copies of any prepared testimony should be submitted at the hearing registration desk.
The Committee would appreciate advance receipt of prepared statements.

In order to further publicize these hearings, please inform interested parties and organizations
of the Committee's interest in hearing testimony from all sources.

In order to meet the needs of those who may have a disability, the Assembly, in accordance
with its policy of non-discrimination on the basis of disability, as well as the 1990 Americans
with Disabilities Act (ADA), has made its facilities and services available to all individuals with
disabilities. For individuals with disabilities, accommodations will be provided, upon reasonable
request, to afford such individuals access and admission to Assembly facilities and activities.

Joseph D. Morelle
Member of Assembly
Chairman
Committee on Insurance

PUBLIC HEARING REPLY FORM

Persons wishing to present testimony at the public hearing on Financial Guaranty
Insurance and the Cost of Raising Public Capital are requested to complete this
reply form as soon as possible and mail, email or fax it to: